Tuesday, August 23, 2016

DPS kickbacks were spent to help schoolkids? No way, feds say

One by one, the Detroit principals confessed to stealing – but said they did it for the kids.

One said she took kickbacks from a crooked vendor but spent it on field trips and class decorations. Another admitted the same, saying half of her kickbacks helped her school. A third also admitted taking kickbacks, but not as much as the government claims.

All of it’s hogwash, says the government, which after months of keeping quiet is starting to disclose what 12 principals did with the kickbacks they received for helping vendor Norman Shy scam $2.3 million from Detroit Public Schools. They spent the money on themselves – on everything from cruises and jewelry to furniture and furs – say prosecutors, who are discrediting the principals' altruistic claims just weeks before they are to be sentenced.

In new court documents filed Monday, the federal government lambasted ex-Detroit principal Clara Smith, saying she spent her kickbacks from Shy on a Royal Caribbean Cruise, airline flights, El-mar Furs, a trip to Caesars Hotel and Casino in Las Vegas and on Art Van furniture. It was the first such disclosure by prosecutors, who have secured 13 guilty pleas in five months.

At Smith's plea hearing, she told the judge that she accepted $194,000 in kickbacks from Shy because she "fell from the grace of God," and insisted that she didn't spend it on herself. Rather, Smith claimed that she spent her kickbacks on classroom decorations, field trips to Washington and Chicago, and school clothes for her students.

Prosecutors tell a different story, saying Smith went out of her way to hide her crime by asking Shy to write checks to her husband, her daughter and to various stores so that the kickbacks would go undetected.

"Smith spent the kickbacks she received on herself," wrote Assistant U.S. Attorneys J. Michael Buckley and Frances Lee Carlson, arguing Smith was "motivated by what she personally stood to gain, instead of what was best for her students."

And even if she did spend some of the money on her students, Buckley wrote, that's "irrelevant."

"Her alleged charity was only made possible by fraud committed against taxpayers and the Detroit Public School system," Buckley wrote in the filing. "Charity involves giving away one's own money, not money that belongs to others."

Smith, 67, of Detroit, who was principal at Thirkell Elementary-Middle School, will be sentenced Sept. 14. She is among 14 individuals charged in March with helping Shy run a years-long kickback scheme that involved billing DPS for $2.3 million in school supplies that were rarely delivered.

It worked like this: The principals signed off on Shy's phony invoices. When he got paid, he kicked back money to them. Of the 14 charged, 13 have pleaded guilty, including Shy, the central figure in the case who faces up to seven years in prison when he is sentenced next month. He also has to pay back $2.3 million in restitution to DPS.

Monday's court filings indicate the government wants to make sure that Smith and the other DPS officials don't get probation on altruistic grounds, as several have claimed they used the money on the kids.